753E Anti Avoidance

Summary

This section sets out a number of anti-avoidance provisions that apply to the tax treatment of qualifying financial transactions under this Chapter.

Details

Definitions

(1) “the Acts” are

• The Tax Acts
• The Capital Gains Tax Acts
• The Stamp Duties Consolidation Act 1999
• The Value Added Tax Act of 2010

and any instrument or enactment relating to those Acts.

“tax advantage” has the same meaning in this section as section 811C. A “tax advantage” is, essentially, the effect which the would-be tax avoider is trying to achieve through a tax avoidance scheme. It includes reducing the amount of tax payable, avoiding the payment altogether, deferring the payment, generating a refund or payment of tax to the tax avoider or increasing the amount of a refund or other amount payable to the tax avoider.

“transaction period” refers to the period where a stock borrowing or stock transfer pursuant to a repurchase agreement has taken place, but its corresponding stock return has not yet taken place.

(2) This Chapter does not apply to any financial transaction where it would be reasonable to consider that-

• the financial transaction has not been undertaken for bona fide commercial reasons, and
• forms part of any arrangement or scheme of which the main purpose, or one of the main purposes, is the avoidance of tax.

(3) In determining the-

1. capital (both share capital and loan capital),
2. voting rights, and
3. entitlement to assets on a winding up,

of each party to a stock borrowing or stock transfer pursuant to a repurchase agreement regard shall be had to the amounts held by each party-

• immediately prior to that stock borrowing or stock transfer taking place, and
• during the transaction period,

and the percentage holding of each for the transaction period shall be the amount that does not give rise to a tax advantage for that party to the financial transaction (or an associated entity of that party).

Relevant Date: Finance Act 2021